It’s not just tech: Organization design is at the heart of digital transformation

Successful transformation starts with realizing that technology, surprising as it may be, is flexible. Everyone in your organization is important.

I recently saw a headline asking if I was ready for the quantum computing revolution. It was not just the first wave, but also the second wave of a technology that should have been central as part of a smart enterprise’s digital transformation.

You obviously saw new elements for them that seem to be a solution to all our needs: “Our technology will have a better overview of your data, better automation and efficiency, and a better customer experience.” once it is implemented, of course, we are done, the victory is ours!

After 20 years of helping companies become more digital, I have something new: we will never be ready.

There will always be a new system that promises everything. The only constant changes, right? 

Therefore, transformation should be seen as a journey, not a destination, and a successful transformation starts with knowledge of this technology, no matter how good it is. Everyone in your organization is important.

What makes the difference is an organization’s adaptability, a need strongly driven by a pandemic changing consumption and work habits, regulations, supply chains, and business models. The goal should not be to be more “digital”, or to be like the first digital companies (many of which failed), but to be able to change, to build a culture of innovation and learning. “Survival of the fittest” was neither the strongest nor the fastest, “Darwin said. It’s about who can best deal with change.

In a recent Harvey Business Review survey, “Rethinking Digital Transformation,” only 20% of executives believe their company’s digital transformation efforts are effective. This is in line with another study showing that 70-80% of large-scale change projects do not deliver the desired results. There are many reasons for failure, but a critical factor is the lack of a clear and well-communicated strategy. Another thing is to start with ‘digital’.

“We see some fundamental differences between business goals and technology investments when companies look for shiny objects,” said Melissa Swift of Korn Ferry in the HBR study.

It is essential to ensure that the choice and implementation of technology is driven by the business strategy and not the other way around. The platforms and applications are designed to be flexible and rich enough to serve a wide variety of customers, but not so flexible that it makes development overwhelming. As a result, customers may need to try to adapt business models to the technology, with the support of professional service teams focused on implementation, but not with the broader planning and change management needed to ensure success. Customers may know all the options available to use a system, but they may not know or disagree.

The keys to success with organizational design / digital transformation are like any major change, as I mentioned above regarding strategy. All others – reporting structures, culture, business processes, and human practices, such as recruiting, training, and awards – must support a strategy and not be driven by technology.

There are at least as many models of strategy development and organizational design as there are consultations. Perhaps even more so, given the evolution of business thinking and professional service marketing. That said, one of the simplest models to conceptualize an organization’s design is the Star model developed by Jay Galbraith of MIT Sloan Business School and others. Many of the other models are variations on this theme and are useful for introducing basic concepts.

Galbraith’s five-pointed star shows the interdependent considerations of strategy, structure, processes, rewards, and people, the fundamentals of design. An organization’s design influences behavior, performance, and the culture of behavior.

Strategy is the company’s formula for winning, it is the ‘why’. The strategy defines a company’s values   and mission, as well as the motivations of the customer it serves, the products and services it offers, and the value it provides the customer: competitive advantage. It also recognizes what the company prefers NOT to do, the things that can distract attention and resources. Implementing new technologies to improve customer service is not a strategy in itself; Not even digital transformation: it is an initiative that supports a strategy.

The hierarchical organizational structure described in most organizational charts is increasingly inadequate in today’s fast-paced environment, where information needs to flow more easily and decision-making needs to emerge. The boundaries that determine what’s inside and outside the company can be blurred for companies that share data and insights with customers to improve service and delivery. There is no answer to a structure, but companies that ‘digitally transform’ – who want to develop and innovate quickly – have flatter structures than cross-functional teams that take all perspectives into account. Teams have a certain degree of autonomy to act in favor of the general strategy: freedom within a structure.

As it is often used, digital transformation refers mainly to the simplification of business processes or operations. It is also part of the plan that can be influenced by technology, including knowledge and financial systems that make data more accessible to more flat and mobile organizations for faster decision making. The customer service team with information, order history, and delivery information at your fingertips can respond immediately and help increase customer engagement.

To keep up with changes, companies’ reward systems (compensation, careers, and other benefits) must be aligned with their strategies and objectives. I worked with several media companies that we’re unable to get their traditional ad search teams to sell digital ads. The answer in both cases was compact plans that made it interesting for account representatives to go beyond what they had previously sold.

Finally, it is important to have the right people. Recruitment, recruitment, and training policies must be consistent with the strategy. I worked with a company that doesn’t understand why it has a creative and comfortable marketing manager. The HR profile for all locations seems to be based on an earlier point in the company’s history when it focused more on creating standardized procedures for building a chain of franchised restaurants than on new ones. Create products and compete with newcomers to the market.

Choosing a business in all these aspects of design helps to define the culture that will be fundamental to the success of the transformation, digital or not. In fact, 63% of managers in the HBR study said that cultural challenges are the biggest obstacles to transformation efforts. A vibrant culture that can go hand in hand is less likely to thrive in an organization with rigid hierarchies and bureaucratic levels.

All organizations are perfectly designed to get only the results they get. Different results require new designs and new designs mean changes.

“Transformation is not just a project,” said George Westerman of MIT Sloan School of Management and author of Leading Digital: Turning Technology in Business Transformation. ‘This is something that should be at the heart of an organization. It means creating a culture so that transformation is a natural way of working.

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